United County Real Estate 1st Edition 2024

COMMERCIAL PROPERTIES : AND THE OFFICE BUILDING CLASS RATING SYSTEM YOU NEED TO KNOW

Investing in commercial property is a time-honored tradition. Whether it is boosting your local Main Street commerce or securing rental income before retirement, these of fi ce buildings provide a wealth of short- and long-term bene fi ts. There are roughly 5.9 million U.S. commercial buildings containing about 97 billion square feet. A good portion of this commercial real estate is in major U.S. cities. Before you sign on the dotted line for any commercial property, you need to know its speci fi c classi fi cation. Here is a macro perspective of of fi ce buildings, their classi fi cations, and the general expectations you should have for such properties.

Class A Office Buildings Most of the information we’ll review comes from the Building Owners and Managers Association International (BOMA). While they are not the “of fi cial” classi fi er of buildings, their guidelines are the most referenced. For example, a Class A building should be considered the most prestigious or premier space. These can be a mix of new builds or historical spaces, but they should always have the very best amenities, infrastructure, and tenant services and be owned by an individual or collective with a positive reputation. Some of the more common characteristics of a Class A building would be: • Property management and in-house security • Professionally managed lobbies • Versatile concierge services • Valet parking teams • Comprehensive HVAC • Public/Private Wi-Fi access • Covered parking (garages or outdoor spaces) • Gyms, showers, and locker rooms • Private spaces on the roof or outdoors • In-house dining options • Daycare/childcare available • Some celebrity or premier tenants

Class B Office Buildings Moving down our list of of fi ce building categories, we land on Class B sites. Most often, these were Class A buildings at one point or another but have slowly moved down a peg because of outdated technology or poor maintenance. That doesn’t mean the buildings are not worth quite a bit, but only that they are slightly showing their age. These are fantastic investment properties because they have solid infrastructure you can easily update with a few minor tweaks.

Most Class B buildings feature amenities like:

• Some on-site parking is available • Advanced security parameters • Bike or eBike storage • Shared outdoor spaces for gathering • Common areas besides a lobby

Class B is what you’ll fi nd most investors seeking out because they are attractive, highly functional, and have a reputation for being worthwhile by the municipality and banking sectors. Class C Office Buildings Finally, we have Class C of fi ce buildings for you to consider. These are good investment properties if you have many smaller businesses or individual tenants lined up. They are at the lowest commercial rental pricing and do not have the same amenities as either Class A or Class B commercial real estate. The challenge is fi nding a Class C of fi ce building in a good area. With the lower rent levels, it is expected that these buildings will be in a state of disrepair or will have visible signs of needed improvements. Maybe there is a “lobby” area with chipped paint and stains on the carpets or an elevator that goes slower than walking up the stairs. The only real “amenity” for a Class C property is the actual rented space. That is why so many startups and businesses with 1-3 employees use these properties. They know the expenses will be lower, even if the location is less prestigious.